Stock Market News For Nov 3, 2017 – November 3, 2017

Markets closed mostly higher on Thursday after House Republicans finally revealed a detailed framework for the new tax policy. Subsequently, the Dow hit its 55th record close for the year. However, home-builder stocks declined following such announcements and weighed on the S&P 500. Meanwhile, President Trump nominated Jerome Powell for the post of Fed Chief which led to broad based gains for the markets.

The Dow Jones Industrial Average (DJIA) closed at 23,516.26, gaining 0.4%. The S&P 500 Index (INX) increased 0.1% to close at 2,579.85. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,714.94, decreasing 0.1%. A total of 7.4 billion shares were traded on Wednesday, higher than the last 20-session average of 6.2 billion shares. Advancing issues outnumbered decliners on the NYSE by a 1.06-to-1 ratio. On the Nasdaq, advancers outnumbered decliners by a 1.29-to-1 ratio. The CBOE VIX decreased 4.1% to close at 9.78.

House Passes the Tax Bill

Republicans of the House finally unveiled a detailed tax cut policy under the Tax Cuts and Jobs Act which seeks to reduce corporate and revoke the taxes paid by large businesses. The Bill has not been formally signed into law but a detailed framework has been laid out.

The tax bill reduces the corporate tax rate to 20%, making it the permanent rate. The Joint Committee on Taxation stated that this is by far the most exorbitant facet of the tax reform policy, amounting to a whopping $1.46 trillion over the next decade.

Subsequently, tax rate on pass-through businesses would be reduced to 25%. Furthermore, the individual tax rate would apply to other income, with the top rate being 39.6%. Effectively, this means that businesses such as ‘personal-service’ companies would hardly benefit from such rates.

Moreover, the framework also stated that repatriated cash would be taxed at 12% and repatriated profits at 5%. Finally, the deduction on domestic production stands abolished and this would help accumulate over $100 billion in as many as 10 years. Such a detailed framework offered a sense of assurance to the investors following which the markets gained traction.

Trump Nominates Powell as New Fed Chief

In a much anticipated move on Thursday, President Trump appointed member of the Federal Reserve Board of Governors, Jerome Powell to be Yellen’s successor post the expiration of her term as the Fed Chief in February. Investors view him to be someone who would be fairly judicious in his approach toward monetary policies. There were broad based gains for the markets post this announcement.

Markets Close Higher

The Dow amassed 81.25 points on Thursday to hit its 55th record close so far in 2017. Such a stellar rally was supported by gains for shares of 3M (MMM – Free Report) and Boeing (BA – Free Report) , which increased 0.9% and 1.6%, respectively.

The S&P 500 advanced half a point to end in the green, with financials leading the advancers. The Financial Select Sector SPDR ETF (XLF) gained 0.9%. Of the 11 major sectors of the S&P 500, six ended higher.

On the economic data front, nonfarm productivity in the United States in the third quarter surged 3%, up from 1.5% in Q2. The consensus estimate for the period was a growth of 2.5%. This marked its biggest growth in as many as three years. Meanwhile, productivity in the manufacturing sector tanked 5% — its largest since 2009.

Initial claims for last week came in at 229,000, falling by an astounding 5,000 from the previous figure. This marked its 45-year low.

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.